Since our last quarterly outlook called ‘Maximum Uncertainty’ the world has moved from bad to worse. Growth prospects have soured and governments and central banks are everywhere pulling out the stops to save the system once again. In Europe, renewed efforts to save the European Union from its debt crisis

Though the world economy will see robust growth of 3ǔ percent this year this figure papers over a chasm between developed and emerging countries. While the developed economies led by the heavyweights (U.S. and Eurozone) are struggling to cope with the drag from deleveraging, emerging markets have hiked rates as

Waiting for a US dollar rally this year has felt like Waiting for Godot at times as we anticipated one for a long time before the greenback finally rallied sharply in late August and early September after a long period of stagnation over the summer, despite a number of market

As we had previously suggested was possible at its 20/21 September meeting, the Federal Reserve announced that it would indulge in a so-called ‘Twist’ operation-selling $400 bn of its holdings of under 3-year Treasuries and buying $400bn of 6-30 year maturities in an attempt to lower long-term yields given

In the run up to the 2008 global financial crisis, China’s manufacturing sector was epitomised by a predominant focus on exports resulting in a constantly rising trade surplus and a hefty accumulation of FX reserves. In the aftermath of the crisis however, the situation has dramatically changed, partly due to

In 2008, the global financial system faced a potential meltdown when funding seized up for investment banks, ultimately leading to the failure of Lehmann Brothers. Three years on, we have got plenty of problems, but – as we shall argue investors may want to differentiate between a financial meltdown

In January, we published Research Euroland: Debt crisis scenarios, 25 January 2011. The document contained three debt crisis scenarios. Nine months have passed and the debt crisis is even more intense now than it was then. We therefore find it appropriate to give an update on our view on the

Since the end of July equity prices have been hit hard, as confidence in western leaders’ ability to tackle imminent debt issues has plummeted. The S&P500 shed 16% in a little over two weeks. In this paper, we examine how such a fall feeds into GDP growth and thereby whether

The cyclical outlook has changed significantly over the summer and with it also the central bank outlook. The Fed now predicts near zero percent interest rates until at least mid-2013 and we expect it to be right in this prediction. Also, in the eurozone further hikes have been cancelled, as

The financial crisis triggered a rising path for the US gross debt as it increased from around 60% in 2007 to around 100% in 2011. Despite the rapid pace of the rising debt, the current level is relatively modest compared with other major OECD countries. However, the future path for